Detailed new reports by two independent groups offer a devastating portrait of the 16-month-old U.S. reconstruction effort in Iraq, blaming ongoing violence there in large part on misplaced U.S. priorities, bureaucratic bungling and poor planning.

[...]

[Center for Strategic & International Studies] interviewed U.S. civilian and military reconstruction officials, international relief experts and more than 400 Iraqis in 15 cities. Its findings were echoed in a report by the International Crisis Group, a Brussels-based organization that tracks conflicts around the world.

ICG says the U.S.-led Coalition Provisional Authority committed "stunning mistakes" and left a "fragile, dysfunctional legacy" when it handed authority to an interim Iraqi government in June.

In the fall of 2001, in recognition of the U.S. government's inability to respond to the challenges of post-conflict reconstruction, CSIS President John Hamre and U.S. Army General Gordon Sullivan (retired) established the Post-Conflict Reconstruction (PCR) Project.

Well that's reassuring. No one in the DoD was apparently listening before the war started.

The U.S. efforts thus far have been largely divorced from the Iraqi voice and undermined by security problems and the lack of jobs, and they are not leading toward entrenched sustainability of Iraqi capacity. They are also not leading to positive trend lines across the sectors. Metrics that focus too heavily on quantifiable inputs do not tell a complete story. Moreover, U.S.-driven metrics and U.S. government propaganda are not trusted sources of information for Iraqis. As rosy as they are, they do not make a dent in changing Iraqis’ perceptions. Until we start to see a positive trend line and arrive at a point (i.e., the tipping point) where Iraqis can sustain that trend, it is too early to claim success, and too risky to try to define circumstances that would justify an exit.

A good chunk of the report is on the methodology used.

You know how much we love footnotes:

By mid-July 2004, only $458 million of the $18.4 billion in U.S. reconstruction funds for Iraq had been spent, and U.S. officials admitted that their spending practices had not yet addressed the immediate need for job creation." From Richard Lugar, “Opening Statement for Hearing on Iraq—Post Transition Update,” Chairman’s statement, Senate Foreign Relations Committee, July 22, 2004, Luger Statement.

Of course, we're not exactly sure which $18.4 billion he's speaking of since over $160 billion has actually been appropriated but we'll guess State.

Even when the United States has focused on labor-intensive projects to suck up some of the unemployment, the vast bulk of the money for U.S.-funded projects goes to U.S. contractors, and up to 50 percent may be lost to profits for U.S. or other international contractors, security and insurance costs for contractors, and administrative and overhead costs; only a small portion ever makes it into the hands of Iraqi laborers or companies.

Surprise surprise.

U.S. assistance funds should be targeted to providing more direct assistance to Iraqis. The focus should be balanced between larger scale projects and community level initiatives. In addition to employing Iraqis, smaller scale projects run by Iraqis are more viable given the security environment. Security risks have severely hindered the ability of foreign contractors and their staffs to work in Iraq. They and their projects provide ready targets for insurgents and criminals. Reliance on large U.S. contractors and other foreign companies also means far less money is available for Iraq’s reconstruction, with money lost to profits and security-related costs, among other things.

Ok. You get the general gist of the report. Let's look at the next one.

That pretty much sums up the report but let's keep reading. Footnote alert.

Between June 2003 and August 2004, there have been nearly 100 attacks on pipelines, oil installations and personnel despite intense security measures. -- See Institute for the Analysis of Global Security, Iraq Pipeline Watch. These figures are far from reliable as many incidents go unreported. Oil production is well below anticipated levels. The Brookings Institution, Iraq's Oil Sector One Year after Liberalisation, 17 June 2004,

For what it's worth, this report addresses fiscal reality and the ramifications of the decision making of the CPA. It's not pretty.

Although it was not implemented, the CPA's privatisation policy harmed Iraq's economy. Unable to privatise but unwilling to relinquish that goal, the CPA failed to come up with an alternative approach that might have restructured and revived ailing state companies and exploited their remaining assets and labour. Indeed, even afterprivatisation was off the table, it was busily drafting and to some extent implementing proposals that preserved its spirit: lease contracts to end state monopoly control and initiate build-operate-and-transfer (BOT) schemes.

Only some of these quasi-privatisation measures actually were carried out, but they helped define the CPA's agenda until June 2004. Moreover, the CPA froze the accounts of some state-owned companies and sold the inventory of others (principally those under the aegis of the ministry of trade) in order to replenish Iraq's budget. These decisions led to severe liquidity shortages in several state-owned enterprises, including some that could have been put back in business, if only temporarily. When coupled with the sweeping de-Baathification that deprived state companies of many of their most able managers and technicians, the result was that even state industries with a relative comparative advantage (such as cement companies, which benefited from high international transport costs and heavy Iraqi demand) were unable to participate fully in the rebuilding process...

Don't know if this is the intention of the report, but it really does read like the Bush administration set out in post-war Iraq to create a neo-conservative neo-liberalization wet dream society. Shudder. The CPA even went so far as to ban labor unions in public enterprises thru a law originally issued by Saddam Hussein.

We were very pleased to see the ICG report mention the lack of oil metering equipment in Iraq. Gold Star for not sweeping it under the rug.